Ep. #796 - $400M in Capital and What We Did with It

Matt DeCoursey 0:00

And we’re back for another episode of Startup Hustle, Matt DeCoursey. Here to have another conversation. I’m hoping it helps your business grow. Raising capital is such a popular subject on this show. And I figured that we would continue the popularity with today’s discussion. So why not bring in a founder who has been on the show a couple of times before, but someone who has raised $400 million in capital, maybe even more. And I’m really just curious about what you do with all that. Like, you know, I don’t think most people can count that, I had to take my shoe off to arrive at the 400 number, but I want to learn a lot more about that. And before I introduce today’s guest, today’s episode of Startup Hustle is brought to you by Gusto. Gusto has modern solutions for modern HR problems, whether it’s talent management, payroll, or onboarding tools. Gusto HR platform has it all for you to be smarter than your competitors. And you can try a free three-month subscription if you go to gusto.com Ford slash Startup Hustle. Once again, gusto.com Ford slash Startup Hustle, you know what’s even easier is just scroll down to the show notes and click the link because the link will take you there. With me today. I’ve got Sandy Kemper, and Sandy is the CEO and founder of C2FO. It’s a financial services company headquartered in Kansas City. But with a worldwide presence, you can go to c2fo.com. There’s a link for that in the show notes, too, as Sandy has been on our show twice. So welcome back, Sandy.

Sandy Kemper 1:34

Thank you, as we were saying earlier, it’s only been 600 shows since our last time together. So, really appreciate you finally coming back to me. Thanks. Thankfully,

Matt DeCoursey 1:41

I remember the first one was episode 100, which came out on May 9 of 2019. And we were like, oh my god, we made it to 100 episodes. It’s possible that this could be the 800th episode in that bill. I’ve just been delighted to be here. Yeah. And we were talking before we hit record about how it’s changed. You’re like, is it just you and me, and it’s been we’ve done one-on-one shows for maybe the last 600 episodes since you are on episode 208. Now, it was a long time ago, man, November 14 of 2019.

Sandy Kemper 2:13

A few things have happened since. Nice to be here in person and right in face to face with you versus over zoom. So I’m grateful for that. Nice to be here.

Matt DeCoursey 2:22

And it’s more of my pleasure than your stress. So you’re good, man, well, with 600 episodes in between us in the last one. And assuming that we don’t want to give our listeners carpal tunnel by making them scroll all the way back. Let’s go all the way back and get a little bit of your backstory and the data of C2FO. Well,

Sandy Kemper 2:43

recovering banker, still, I used to be, you know, still, I’m a financial guy, but now more of a financial technology guy. But when I was a banker, I was trying to figure out ways to get capital to companies that might have been having a little bit more difficulty than others. And sometimes, it was a relationship based. I knew the character of the individual. But we were always involved in risk-based underwriting of working capital, which means if I’m gonna make a loan, I’m going to take a risk on you because that loan may or may not work out your business may or may not survive. The the thesis for a couple of companies since that time, was how do we eliminate risk and the giving or provisioning of working capital? And what we did at C2FO? was we decided that if you matched all of this account payable with all of this account receivable, so big companies dealing with lots of other businesses, paying those suppliers often pay them in 30 to 45 days. And when I was a banker, I’d loan against that 30 to 45 day account receivable. Well, I take credit risk when I did that, instead of taking credit risk. Now why don’t we create a marketplace that lets that big company pay that smaller company sooner eliminating the need for that small company to have to go to the bank, to go through the credit underwriting to go through the risk analysis to pledge their house or to put a personal guarantee on it? Why don’t you just get people the capital they need to cause their businesses to grow. And the way you do that is by eliminating credit risk and matching the money that’s going to come to them in the future to their need today. And allowing that business to request early payment in our marketplace. So that’s not much of a backstory, financial guy turned technology guy with the idea of making capital available for everybody so they can grow their business.

Matt DeCoursey 4:15

But you’re also a lifetime entrepreneur because I think we had talked about

Sandy Kemper 4:19

back to my shoeshine days,

Matt DeCoursey 4:21

and all of that. And you know, and once I get that episode is literally just titled entrepreneurship. So good. That last time I checked that had a five-digit number of downloads on it perfect. Yeah, see if we can beat it this time. I’m hoping I’m hoping we can now I mean, speaking of big digits, man, you’ve raised a little bit of money for for this business and you know, 400 million bucks is a lot last time you’re on I think you had about half of that just come on. And I really thought that it was good to invite you back and maybe we could let people know what the hell you do with 400 million bucks or maybe what you’ve done

Sandy Kemper 4:58

way Exactly. Well, you know, we started off We were lucky we were, and I think I remember the story vividly that I’ve told many times, but I remember the moment when I realized that we went Costco was this is this giant company that was one of our very first customers. And, and, you know, I had been a banker, and maybe they thought I was a little bit more important than I actually was, or am at that time, and at this time, but they want to do a site visit. And it hit me that, gosh, we, we were going to host these guys coming in. And they probably thought we were a big company, like five people. And so when they showed up, I knew that we had really low key offices, no big expenses, really careful on how we were managed off because we had no money at that time I had no, I had not raised anything. But the story of Costco was they showed up and basically asked everyone who was working for us to bring their brother or sister so we could present a larger FTE equivalent, we got we got the business, and we signed the deal. But here’s the here’s the follow on story to your point about raising capital. When we signed Costco, which was a great, wonderful miracle event, right, they gave us they gave us our chance, they gave us our shot, there were like the little company that I’m sure there’s lots of companies that Costco helped build, were one of them. But as soon as we brought on Costco, we realized, wait, wait a minute, these guys do business with sell, too, and buy from folks in 100 different countries. And so we were supply chain. So our job was to set up a marketplace where Costco could pay their suppliers early, where the suppliers could give a very small incentive to cause Costco to pay them early. And immediately on day one with five people, we had to set up a global platform. So be lucky or BB, be careful what you wish for, we were lucky enough to land Costco, but all of a sudden, poof, we became a global company with five people. So immediately went into Oh, my goodness, we’re gonna have to raise a lot of money, we’re gonna have to figure out a way to build a platform that’s going to scale across 100. And now 173 countries, I think 68 different currencies, 20 different languages. So a very large part of that capital went to building a global platform to make it work with the tax codes, and the requirements and, and the processes of all these various countries, all these various languages, all these various tax regimes, all these various languages. So unlike a company that would have been better, and probably smarter to start just in the United States, and focus on that, but when you’re dealing with these very large companies like an Amazon, or a Costco or an Intel, they’re global. And they’re all customers of ours. In fact, we just landed, we just landed the the last big win gave us five of the top five companies in the world. It should Western world, now use us as the platform for paying their suppliers early.

Matt DeCoursey 7:43

You know, one thing to clarify, for those of you listening, if you build a product or manufacture something, one of the things you’re always wrestling with is the net payable terms. And, you know, before we hit record, I mentioned I worked for Roland who does 5 billion a year and instrument sales. Now, typically, when you do business with a company like Costco, they want to pay you way later, which depending on where you’re at, or how your business is set up can make it a little tougher, and it can make it a little slower. So to be able to speed up the receivable is really big, especially for growth for that company. So they’re not sitting there going, Oh, and that Costco check or wherever it comes down. Yeah.

Sandy Kemper 8:25

Well, in here, you’re you’re dealing with him. By the way, Costco is, most of our large customers, enterprise customers are pretty fast payers 30 days, 45 days, normal terms, the United States around 45 days, 60 plus or so in Europe, and Mia. And then when you get out into APAC, Asia areas, you can see 90 even more. But those are just trade terms that have existed forever. And most businesses can deal with that because they’ve gotten bank relationships, or they’ve got flow of capital themselves. But a lot of a lot of them can’t. So we’ve given the ability to those who can’t get financing. And we do a lot of work with those who can get financing as well. But those who can’t use us as an alternative to lack of growth, right? It’s not just an alternative to banking or availability of capital. My alternative is I can’t grow, I can’t hire people, I don’t have the cash flow to do it. I’ve got to wait to be paid. And that waiting sucks up a lot of your cash. I can’t

Matt DeCoursey 9:15

build more stuff, which might take who knows? However long and Yep, exactly. Now we’re in a world where you know, you watch 60 minutes, and they’re showing you the line of tankers and ships that are waiting to come in. And

Sandy Kemper 9:28

there’s a there’s an SBA study that looked at this some time ago. And it’s old data, but we use some of that data to calculate and we also talked to some of our customers about how they’re using the capital that we’ve given them and how this works inside their business, the formula by the SBA and I think also that maybe the Federal Reserve, was it for x amount of capital delivered early either through a loan or through early payment, and our marketplace can create wide number of jobs. So last year, we did something on the order of $60 billion of funding to companies as I said, and all these various kinds of trees around the world. And it’s been a while since I’ve looked at that formula. And maybe the last time I looked at it, we had done 20 billion of funding, and we created 100,000 jobs. So it’s maybe on the order of 250, maybe as much as 300,000 jobs enabled, created, because companies now have that cash flow to be able to get the inventory, hire people build the product, sell it, and be paid on day one, instead of being paid on day 45.

Matt DeCoursey 10:24

I mean, this and these are the delicate little things that Joe consumer doesn’t normally think about, you see an empty shelf, and you’re like, What the hell, you know, but these are the end, you know, on the flip side, on the completely other side of that, and where I had some experience with this, as you used to have floor planning. So, you know, so businesses can fund having the inventory. If any part of this breaks the wheel slows down?

Sandy Kemper 10:50

Well, and look, banks do a great job as an economic catalyst to most major economies, it turns out that we have a really extraordinary banking system in the United States. And it’s still kind of broken for small business still kind of broken for minority business still kind of broken for well known business, startup businesses, new new businesses have to be around for a while before they get bank credit. It’s even worse elsewhere. I mean, if you look at adoption rates for us, in India, great economy, lots of great banks, but not as efficient not as effective as our banking system. Our adoption rates or utilization rates are just the amount of folks that use us in India is three and 4x. What it is in the United States. So wherever the system is a little bit more sticky, a little bit more wonky, a little bit more broken. We do very well, and the US has been a place where we started, but we found a tremendous global need. And that’s another reason why we’ve expanded globally using some of that, some of that 400 million. But the other the other point of the 400 million is twice now we’ve done raises to put money into the hands of our team. So we’re allowing, allowing isn’t the right word, we’re enabling liquidity for our for our crew, right? We’re up to, Gosh, 850 people now and this last raise, everyone could sell up to 15% of their shares. So we know no small amount of pride, hopefully, it’s not false pride, but no, no small amount of pride and providing capital to my team, it’s great to be able to see them cash in 100,000, or 200,000, or even 50, or maybe even a million.

Matt DeCoursey 12:14

But let’s actually let’s actually circle the wagons around that for a second. Because, okay, so you’re a privately owned company, meaning you’re you don’t buy you’re not going to open your Robin Hood app right now and by CTFO. And you know, maybe that changes at some point. But when Sandy’s referring to providing liquidity for his team, so these are key players and people that have ever been equity shares, whoever

Sandy Kemper  12:36

the first person I’ve ever been in our company is an owner. So just as a rule for us, you’re in the shop, you’re on our crew, you’ve got equity, you’re an owner, I asked you to think like an owner would be hypocritical for me not to enable ownership for you now in a private company, to your point you can’t sell again, so, so morally canceled easily, one of the great sources of capital is the company just buys your stock back. And so if you raise a certain amount of money, you can turn that money around, yes, you can use it to fund operations, which we do. But a very, wasn’t a majority, but a very large amount of money in this last raise, which was 140 million went to allowing our team to sell shares to the company and to receive cash back. How was that received?

Matt DeCoursey 13:12

Is that a big? Yeah, it’s

Sandy Kemper 13:13

a it’s a nice thing, right? I mean, they’re working their tails off, we’ve got a great, got a great crew. And I know the biggest issue is having a conversation with the team to say, Look, I can’t give you advice one way or the other. Sometimes the biggest issue is telling me it’s okay to sell, right? I mean, it’s only 15%. You’re gonna have 85 left. And oh, by the way, you’re probably going to get another stock option grant at some point in the future. So it’s not it’s, I’m, I think it went well. The interesting point is sometimes you have to persuade people. I want to hold on to this, because I know it’s gonna be worth more in the future. It may very well be and certainly, you know, it’s gone up quite

Matt DeCoursey 13:49

a bit have some restrictions around that. Yeah. Well, I get people that they’re like, which 401 K funds? I can’t tell you? Well, I

Sandy Kemper 13:58

think I can’t tell you. Exactly. But you think about you think about the appreciation,

Matt DeCoursey 14:03

any of them as well. Because one thing when you were describing that, I’m thinking, Did you also have to say, hey, we won’t look at it poorly, if you do so. Absolutely.

Sandy Kemper 14:10

Absolutely. So. So I might, my team knows that. Almost all the money that I’ve gotten the company and I was going to philanthropy, and my kids are very cool with that. And my wife’s, obviously she’s the one that really thought we should do that. So I told him, I was going to sell some shares to fund our charitable trust so we could begin giving money away while I’m still relatively young and able to do stuff with my kids, because they’re going to be on the show to build trust with me and think about how we give back to the community. So I think I directed by saying that yeah, I’m selling so now I’m not selling because I’m worried about the valuation going down though it might. I think the valuation is probably going to continue to go up knock on wood. My first money into the company was 50 cents a share. This last round was 31 bucks. So it’s not about appreciation. I

Matt DeCoursey 14:54

hope I knew I shouldn’t have waited.

Sandy Kemper 14:56

Well, thank you. It’s not too late. I don’t know I don’t think we’re gonna get a 60x a 60x on 30. But it’s a great thing to be able to take liquidity. And as I said, if you’re going to be with a company, you’re gonna have options, you’re gonna have ownership, and it’s likely you’re gonna continue to get more options as time passes. So we’ve had that conversation, I had that conversation with the team, and I think it was, I think, people are pretty excited about being able to get some cash.

Matt DeCoursey 15:21

There’s one thing I don’t think we talked about in the last couple of episodes that you’ve been on, which is the foundation and, you know, whether you’re in Kansas City or somewhere else, look out for the things that can help entrepreneurs, you know, and in Kansas City is, is, in my opinion, like, got a wealth of that like pun intended, because, you know, we’ve got Helzberg entrepreneurial,

Sandy Kemper 15:46

you’ve got the biggest foundation in the world devoted entrepreneurship and is right here in KC, brought to you by you and Marion Kauffman, who started Marian Labs was the owner of the Royals, I just knew how he started, right, he’s grinding up oyster shells in his basement and putting them in capsulize. I mean, sell him and the reason he called it Marion Labs was because he didn’t want to call it Kaufmann labs. So we could present that maybe it was a bigger company than just this one man shop named after him.

Matt DeCoursey 16:10

Sounds familiar, I might need to do that. More often. Just have more people may just go to the lab and just happen. I’m really I’m getting the formula here. It worked out pretty well for him with with your foundation, what is that focused on? Thanks.

Sandy Kemper 16:25

All entrepreneurship, right? So there’s two axes to Christina and I married well above my paygrade back in the day, and she’s been a guiding light for me on many things, philanthropic, Lee and civically community wise, she started with some of her crew, the first all-girls Middle School now becoming High School, in the inner city in Kansas City. Okay. So she, she believed very much that single-sex education, especially with all the stuff that’s going on these days, boys, girls, you know, there’s just a lot of challenge and temptation when you’ve got boys sitting next to girls in middle school in high school, and the idea of a protected environment where you can be single sex, all girls, and without that distraction without that difficulty has been wonderful. It’s been a very well received school in the community. So that’s one of the main charitable organizations we support. And even before that, we started this thing called Yep, que si, or the idea of the school is very entrepreneurial to write because we can get them a base of education, get them smart about how to live their life, go forward and be strong, powerful women leaders in our world, that they’re gonna turn the knob entrepreneurs, right. And we’re giving them education, confidence and ability to go get stuff done. We started before that a group called Yep, KC, which has now expanded to Yep, Columbus, and we’re thinking about going to Denver. And that’s about finding young men and women in high school before they’re off to college, and giving them an opportunity to intern with multiple high tech high growth companies in the course of a summer. And most internships are you go there for the summer, and you kind of

Matt DeCoursey 17:55

make a call around and what and

Sandy Kemper  17:58

you get a paper airplane, and you’ve got no base of comparison. So what I want them to do is come down and hang out with you and your gig and then come over to C to F O for two weeks and then go someplace else for two weeks we’re giving them enough time to soak up some of the culture to see how the cursor does his stuff, or how Kemper does his stuff, or Watson does his stuff, or Christine does her stuff, right? So that they’re getting that pattern recognition of entrepreneurship and realizing that not one of us has figured it out entirely. We all have different ways to skin the cat and give them that and then it’s a very competitive process. We have five 600 Kids apply, we select really only about 25. Those 25 then get the internship across multiple companies, they get a pretty big scholarship grant to go to college and they get to on their resume, say hey, you know, I 500 Folks, I made it through 25 I interned at these cool companies, I learned these things. And I’ve also got the scholarship that was awarded to me so that I can help fund my college education.

Matt DeCoursey 18:53

The reason that that’s thank you for doing that in my hometown, and in general, we’re actually giving away some scholarships in the Philippines this year. And it’s important to make a positive impact where we do business and you know, and since you know we got 99% of our employees over there, we figured it’d be a good place to start. We’re putting some people through school. That’s great. And now it’s also a lot different there. You can actually go to a semester college for about 1000 bucks.

Sandy Kemper 19:19

That’s a whole other kettle of fish. We’ve talked about how inefficient and how wrong the pricing is for higher education here in the United States.

Matt DeCoursey 19:27

Trust me, I’ve pointed that out a couple of times now and with the internship and why that’s important is, you know, honestly, just the most efficient way to say it is it until you’ve seen winning and it’s hard to know what winning is. Yeah, well and but it was a little bit of it and it can really shape your approach and

Sandy Kemper 19:45

you can see you can see different styles of winning, right so to your point is not about winning in a particular monoline method.

Matt DeCoursey 19:52

It’s important to. Yeah, I like to Rogen. And really it’s like, internships are often crap, you know, like I mean, I’m not going to name any of the companies, but literally when I’m saying making cough carpets making coffee and throwing paper airplanes, there could have been me.

Sandy Kemper 20:06

Well, by the way, it was probably made and I probably would never I wasn’t the answer I was doing. Here’s the deal. I was no way I would have been able to get into the program. It’s just it’s, it’s too tough. These kids are extraordinary, like, a good example, a young lady named Vanessa was one of our very first gals in the first class. She had, here’s an example, she ended up in a pretty tough school, and on the northeast side of town, she gets recognized to go to an event in Chicago for outstanding academic achievement, but it’s $1,000, bus ride, hotel room, etc. She doesn’t 1000 bucks. So what do you do when you’re 14 or 13, and you get this award, you want to go to Chicago, and you’ve got no money to do it. She and her mom made 500 tamales, sold it for 200 bucks on the street, got her 1000 bucks, got on the bus, got the hotel, went to Chicago had this thing. You know what she’s doing now, she’s running our program in Kansas City.

Matt DeCoursey 20:58

Yeah, I would hire that person. Because it’s, you know, figure out what you need and figure out a way to get to it. And you know, that’s what good entrepreneurs do. Now, I want to talk a little bit more about the capital before we get too far into managing your team can be as easy as 123 with Gusto, no more late nights for processing payroll, or dealing with business tax violence, no more painful spreadsheets for attendance tracking, say hello to your new smart HR platform, go to gussto.com forward slash Startup Hustle to get a free three months subscription. Now once again, gussto.com forward slash Startup Hustle, there’s a link in the show notes. Also, a link to go to C2FO, I really am so fascinated with this business that you’ve built Sandy in the worldwide nature of it. And you mentioned with $400 million, you build a global platform. Now obviously, Watson and I have some experience building global stuff, we build a whole platform to manage Full Scale because we needed to there wasn’t anything else out there. We could do. We had to do it. Because all these different things even shoved together didn’t do what we needed to do. When you say a global platform does that is that like meaning just having the access to capital and doing things like making it available? People? Trust me, if you want to make something available in two currencies, it’s complex when you’re 68. Is that is that the global platform?

Sandy Kemper 22:14

It is. And it’s got to be a platform that deals, as I said, with certain tax regimes. So there’s VAT tax issues in Europe that we don’t deal with. There are different tax regimes in Latin and South America, different again in China, different again in India. So it’s knowing how to manage so what we get every night compliance? Yeah, well, we get every night, we get five, sorry, we get 50 million approved invoices into our system every night. So it’s a huge platform, those invoices laughing

Matt DeCoursey 22:41

because I think 50 million

Sandy Kemper 22:43

every night, every night daily, and then we push them out to 1.5 million companies, who are the suppliers, to those large corporations who are giving us their AP. So all these large corporations send us all of their accounts payable, here’s what I’m going to pay this company in 35 days. So now what we’ve done is given that company a view of what their future cash flow is going to be, I know, I’m going to be paid in 35 days, cool, I can plan Wait a minute, I’m short on cash, why don’t I put in a 50 basis point bid, like a half a percent bid on my invoice to be paid early. So that rate is much lower than what that company might pay to a bank, if they’re lucky enough to have a bank. Yet, it’s also much higher than what that large companies getting on their cash at the bank. So the trap value is in that sort of intermedial friction that the banks present and banks, as I said, a great economic catalyst for the world’s economies. But they’re not efficient and allocating working cap they

Matt DeCoursey 23:38

don’t keep up with you know, what was it ups or someone have the slogan of working at the speed of business? Banks, not always so much. And we’ve actually had, you know, and maybe plug your ears if you’re a banker. But you know, I have been kind of outspoken in the regards that, you know, banks want to do business with startups, but they don’t know they don’t know how, and you know, it’s like you have you have company might have a company that had an A $300 million exit, and two weeks earlier wouldn’t qualify for a loan.

Sandy Kemper 24:09

But remember, again, when I came out, I was lucky enough to be adopted into a family that was in banking for a number of generations. bank’s number one job all around the world is to protect their depositors money by me. That’s why we have the FDIC in the United States and the FDIC and the Fed and other regulatory burdens, I should have regulatory entities wants you to protect that capital. So you can’t make risky loans and still run your bank. Startups are risky. Well, small business is risky. Yeah.

Matt DeCoursey 24:36

And the main problem that I’ve run into and have this conversation, there’s episodes about it, go look for it in the feed. You know, they just look at like a software company has any assets and banks and even your business is backed up, like an account receivable is an asset. And you know, so that’s the tough thing to have. And I’ve talked to presidents and CEOs of banks and they’re like, I would love to be able to, to fund your business rather than duel loan against an 18 Wheeler full of bolts that I couldn’t do anything with and

Sandy Kemper 25:06

bolts, bolts can be collateral, if you’re a character loan, the other ones are collateral, and you happen to be a good character. But you know, those bolts are pretty substantial too well, and

Matt DeCoursey 25:15

then with that, you know, there’s also you talked about, like, personal guarantees and stuff like that. So my wife has given me ultimate freedom to do about anything I want in life, and especially as an entrepreneur, but she said one thing she’s like, don’t ever lose the house. Yeah. And so with that, you know, I don’t I don’t sign personal guarantees and stuff like that I do creative stuff, or, you know, like, it actually gave me great advice about how to raise capital, because at the time, you taught me how to create a venture round. Well, that

Sandy Kemper 25:43

worked out pretty well. Well, I was happy to be part of it. But it was, but anyway, that’s probably why you have me back. But it was a smart structure, right? The way you did it was really smart.

Matt DeCoursey 25:52

Problem was is that we didn’t know what the company was worth. We weren’t really wanting to sell equity at that point and add 15 months of history, but still millions in revenue, right?

Sandy Kemper 26:02

But it had you sold equity, compared to the price of your equity today, it was to really sell so much better not to dilute yourself.

Matt DeCoursey 26:08

Yeah, so we created our own lending pool. And thank you for that advice. I’ve actually talked about that I did an episode about that. At one time, we talked about alternative funding, somebody’s just gotta be, you know, you gotta be clever, or just figure some stuff out. You know, one thing that some of the best advice I ever got was, and this is where you talk about mentor and and why this is all important is what’s easier climbing to the top by yourself are asking those on top to pull you up, ever since I learned how to spend a lot of time.

Sandy Kemper 26:36

Exactly. So what’s the old Native American proverb? Do you want to go fast? Go by yourself. Do you want to go far? Take your team.

Matt DeCoursey 26:42

Yeah. Is that is that a Native American proverb?

Sandy Kemper 26:45

I don’t think so. I don’t think they say team, but it would be appropriation from something else. Right. So take people with you, because those people will help you along your way.

Matt DeCoursey 26:54

And yeah, well, you’re proving that with, you know, 809 100 employees. And I gotta tell you what I deal with the complexity of doing business in one foreign country. And I can’t imagine what it is to unpack on so many days. And I would imagine, you’ve got to have a hell of a lot of smart people.

Sandy Kemper 27:11

We’re lucky, a lot smarter than I am. But if you’ve got as you do in your business, and I think as most entrepreneurs do, they’re passionate about something they’re solving for something that really means something to them, they’ve got that nobility of cause. And so smart people want to work for companies that are going to make a difference in the world in a good way. Right, we all know, build a differentiated product we all know, met and meet an unmet need. What’s hard, is to make the world better. And the process of doing those things. And if you’ve got a company that does those two things, unmet need differentiated product, and you’re making the world better, lot of smart people are going to be to beat a path to your door, and they’re probably going to stay with you.

Matt DeCoursey 27:46

Yeah, the passion is a key passion is a key ingredient. And that’s one of those things that when we talk to people that we do business with and Full Scale that we point that out. And we’ve learned that if we take someone that’s passionate, doing whatever you need to solve your problem, not only they’re going to do a great job, you’re going to be real happy with Imagine, sky’s the limit. So now with the sky being the limit, I mean, is this app for raising capital? Or is there more of

Sandy Kemper 28:09

a question, we looked a little bit of going public and public markets are intriguing that there’s a little bit of inefficient, probably a lot of inefficiencies what I should say in the IPO process, there’s higher costs in the SPAC process. There’s a lot of liquidity out there, both on the public and private side. And we decided that it was better for us to do private given the deal terms, and it gives us a little bit more time to continue to grow into our valuation and do the things that we need to do to really make sure that we’ve got a hardened platform fully scaled across all of these nations across all of these economies. And ideally, we generally, we want to match all of the world’s AP and all the worlds they are and yet we’re only at 2 trillion of that. So we have 2 trillion of accounts payable and accounts receivable in our market, the market, the global markets, a little bit more like 200 trillion of just AR Yeah, wow. Sorry, AR the course of a year. Sure. Right. So then you gotta figure that if it’s if it’s 200 to 240 trillion of spend in business world and you’re on 60 day terms, it’s gonna be about 40 trillion of AR, right. And then before to truly innovate the, you know, here’s where it gets interesting. If there’s 40 trillion of accounts receivable, meaning uses of cash for suppliers, I’m not paid that money, therefore, it’s sitting on my books as an account receivable I’m going to get in the future. That’s a use of cash kind of a suck of cash out of the business. You need to find liquidity, you can go to banks, the problem is all of the banks in the world, all of the supply chain finance people all of the asset-based lending, looks to me back of the envelope math, to have maybe $4 trillion of liquidity to try to meet this $40 trillion needs. So you got a $36 trillion vacuum. And that’s why we exist to step into that vacuum to provide capital beyond what the banks can do because we take no risk when we when we match capital in our marketplace is simply a allowing a larger company usually, to pay another company sooner. So that other company doesn’t have to go to a bank doesn’t have to stop growing, but can draw down on the cash early from its accounts receivable at a price that they name. So in our marketplace, any supplier, any business can go and name their price for the cash that they want, somebody might name 60 basis points, 50 basis points, 70 basis points, depending on what their alternative costs are. So we’re not trying to compete a customer against another customer. We’re trying to compete against the existing cost of capital that that customer has. So if you’re borrowing at 6%, I’d love to get you filled at 5%. In our marketplace, you’re balling at 10 love to get you filled at eight. So we’re trying to win, and we wrote those patents, those patents have now finally been granted after seven or eight years of us pushing for those patents to be granted. We’re now protected for a number of years to be the only marketplace in the world where people can name their price for the working capital they need to grow their business didn’t know that.

Matt DeCoursey 30:57

I have been a kin to the patent process that is a whole separate.

Sandy Kemper 31:03

I actually my kids are really proud. They’re like, Dad, you’re an inventor now. Like yeah, cool. Check out this patent. Yeah. So we’re lucky, very lucky.

Matt DeCoursey 31:12

Let’s go back to the utilization rate thing, because you know, out that you were talking about 400 million plus and capital and what you do with it, and you know, I was reading one of the many articles about you and your company that are out there and most mostly local.

Sandy Kemper 31:26

That’s the other thing, right? I mean, great. The community here, we love the community, we get great folks that work for us here. But interestingly, here’s a company with $2 trillion of something in its marketplace, providing this year 100 billion of funding to companies in 173 countries and blah, blah, blah, languages and currencies. And because we’re not on the coasts, nobody’s writing about us out west, nobody’s writing about us out here. So thank you for reading the locally produced great quality articles. But damn, you know, what’s again, what’s the guy got to do, by the way?

Matt DeCoursey 31:58

I say that a lot because according to Apple, we are in the top 50 of all time for entrepreneurship podcasts now. Crazy because they should be writing about you. There’s like 1000s. Oh, there’s just an entrepreneur category. But, yeah, here we are in Kansas City, the 28th biggest market.

Sandy Kemper 32:17

But I wouldn’t go anywhere else. Love the people here love the community.

Matt DeCoursey 32:20

I know you get this too. I go. I was in Belarus a few years ago, and someone asked me where I was from. And so I can see like, oh, yeah, cowboys. Entrepreneurship actually the same size as men’s cars. So yeah, but you know, I should be asking you that we did.

Sandy Kemper 32:37

We did this 100 $40 million raise with this great funders and you know, all those great metrics we put out there. And then my, my one of my board members, one of my longest serving great, sincere, wonderful board members at US v. John Buttrick. So USB, by the way, extraordinary venture capital from one of our very first venture dollars into the company way back when, but John sends me a note like he reached the startling article that was startling as a local, local team here in Kansas City wrote a great article, the Kansas City Business Journal wrote a great article. all he saw was a startling article, he writes back, that’s it. Like that’s, that’s all the PR you get for doing one of the biggest raises with all these stats and doing 100 billion of this and 2 trillion of that, and you got one local article. Because what what the hell. So you’re right. But you know what that’s the cool thing is maybe it puts a chip on our shoulders, maybe you and I have a chip on our shoulders to go a little bit harder, a little bit faster, a little bit further, because nobody’s given us the respect that we should have for building what we’ve done again.

Matt DeCoursey 33:33

I don’t think anything. I know, it’s funny, it’s I won an award from Forbes last year and people graduating, I was like, I got nothing for four buckets from, with that. I mean, I gotta be honest, it was really anti-climatic, because I’m not really driven by praise. You know, like, I’m kind of driven by my own really terrible and unmovable standards on most days.

Sandy Kemper 33:55

Our point, it’s not, it’s not for ego for you or for me.

Matt DeCoursey 33:59

But here’s my problem. I accepted that on behalf of my team, because I’m just a guy looking for something.

Sandy Kemper 34:03

But here’s the problem in our shop, right? We’re bringing on 20,000 new businesses joining the marketplace every month. So all around the world, right? You’re good at onboarding, oh, I couldn’t onboard. But here’s what here’s the deal, right? We’ve got we’ve got millions more that we should be bringing in. And when we have the conversation with that customer who finally comes onto the platform, like hey, great, what brought you here and the Oh, you finally I talked to somebody at your shop? Well, what what would have that conversation go? Well, I didn’t know what you did. I didn’t know what C2FO does. I’d never heard of you. So so there is it that that press coverage that the he’s writing my board members, right to be a little miffed that we’re not getting that because we’re still in the education process of telling people what we do, even though we’re quite big at 2 trillion, we’re small relative to the $200 trillion total addressable market, even though we’ve had a million businesses on platform. We’re still small to the 100 million we should have and when 40% of their customers come to you and said never heard of you before, that’s a problem.

Matt DeCoursey 34:57

Yeah, yeah. And, also, Uh, maybe a reminder that on all levels entrepreneurship, finds ways to humble you, brother.

Matt DeCoursey  35:07

Tell you why. It’s a big world with a lot of people doing a lot of stuff. I don’t want to we were gonna talk I want to revisit the utilization rate because as I was reading and which is rare, more of a book on tape,

Sandy Kemper 35:22

I’m looking at him across his microphones get glasses on he looks like he looks like a bookworm. You must read.

Matt DeCoursey 35:27

That’s been the problem if I’m learning how to wear the damn glasses. I’m also hoping my eyes get worse because they’re apparently not bad enough for LASIK.

Sandy Kemper 35:35

So I’m like, it’s kind of stuck in the in-between space. So you’re talking to utilization, which I think is the point.

Matt DeCoursey 35:41

I read a byline that said a significant portion or there was a big focus on diversity and inclusion and meeting underserved markets. And you hit that earlier. But this is something that we have to talk about more in business because you know, when I look at an entrepreneur, I don’t I don’t I try to say that’s an entrepreneur. I don’t like the tags and the labels. Now it’s easier for me to say that I’m a white dude from that lives in the suburbs. It’s 46 years old. And, and, you know, without I’ve tried to always gain a cultural understanding of the job. And you know, why is that so important?

Sandy Kemper 36:19

Well, so first it, small business is 50 to 55% of any economy’s GDP, and growth. And by the way, small business, midsize business, all net new job creation. Yeah, right. So new employees, because they’re a little less efficient, typically than big businesses. They employ a disproportionately large share of the population. So we have to support small biz. Now, small business shouldn’t just look like you and me like old white guys. Small Biz is diverse and small business serving communities in diverse and different ways. And so small biz tends to run usually a little bit more on the minority or diverse spectrum. Because of that, if we aren’t able to provide capital to those companies, we already said to small businesses, more risky startups are more risky, and a majority-minority environment. Unfortunately, minority businesses fail more than the majority of businesses, women-owned businesses, again, trust me, I will tell you, women-owned businesses, minority-owned businesses, better, smarter, grittier tougher than anything I’ve ever done. They shouldn’t fail. These are because they are because they’re gritty because they’ve had to overcome adversity, they’re going to be better entrepreneurs, and we are, they shouldn’t fail. The problem is majority populations. Because of the way humans are wired, have a harder time with minority populations, whether it’s small biz, big biz, brown bears, black biz, women own biz, diverse biz, those those businesses struggle, that struggle, I think makes them stronger, but because they in this minority-majority world have more difficulty succeeding, banks have to underwrite them more carefully. If, however, you can eliminate the need to risk underwriting, in other words, loan if you don’t have to loan if you don’t have to take capital and put it at risk relative to that FDIC thing I was talking about. And you can just get that business page sooner, without having to pledge your house without having to go to like, just give me my money sooner, then you can eliminate, you can eliminate the excuse of bias in the system. Right? I can always say small businesses fail more often, the big businesses strive to be more careful in how I loan to small biz. If you eliminate the lending side of it, and you just get that small business page sooner. There’s no reason for bias, there’s no reason for lack of access to capital. So that’s what our marketplace does.

Matt DeCoursey 38:37

I think that too many people that haven’t owned a business are intimately involved with them. Know how much of a pain in the butt it can be to get just get alone. I mean, just all along, you know, any of it and then oftentimes, the price of it. And that’s what I love about your marketplace, and saying, Hey, this is what I’m willing to pay. And that because prior to that, if you had to get a quote, cash flow loan or receivables loan, I mean, dude, I mean double digits, there weren’t your there, what your profit are looking at its part look at some of the new lenders that are out there

Sandy Kemper 39:10

I think they’re doing great work. I’m not going to name names because I don’t want to point fingers. But some of the new lenders that are out there doing great stuff are still doing 18, 19, 20, 22% loans, which is better than not getting the loan in the first place. It’s great to have that capital. It’s a little mispriced, I think, but it’s price for risk. Again, eliminate the risk you don’t have to have 1518 22% APR is our global cost of funding last year to everyone who drew down that 60 billion that we provided was 5.7% APR in the United States was 5.2% APR. So our global mandate is to be the lowest cost source of capital for your business, and the most convenient way for you to access that capital.

Matt DeCoursey 39:51

That’s remarkably low for business and anything now. I’m not sure I’ve even asked you this in the last couple of episodes. So how does seats UFL monetize this like, what’s your, what’s in it for me?

Sandy Kemper 40:04

Yeah, so the first, the first thing I would say is, you know, for all of the customers that are out there, that are users, thank you. Second, no business that’s using us to pull down capital pays us anything to do that. So there’s no fee to be in the marketplace. So you’re able to ask for your capital from your big customer to be paid sooner. And then what we do, because that customer of yours is going to pay you a little bit less, right, because you’re getting paid sooner, that little bit of profit that that business makes by paying you sooner, we take a 20% share of that as our revenue, okay, we also charge a subscription fee to the large business, because what we’re doing is actually not just making money for that big business, because they’re paying their suppliers early, but a little bit less, we’re actually strengthening their supply chain. So if that big business knows that their supply chains got more diverse suppliers got more small business got a little bit more hardiness, because it’s not so concentrated, if they’ve provided capital to all those diverse businesses in a more cost-effective manner through us, maybe those businesses can provide better product pricing going forward, because that big business, their customer has funded them less expensively than they would have been funded if they were funding from a bank, or if they had no funding at all.

Matt DeCoursey 41:15

And a lot of those cases, you know, you look at the Walmart, or Costco or whomever and you know, they, they want to keep stuff on the shelves. And, and you know, that’s why sometimes when we’ll use Costco and Costco is a good example, sometimes you go there, and this isn’t a dig on Costco, this is just the way things work. And like they have something and then you go back three months later, it’s not there. And then it’s there three months later. And these are, these are the little supply thing. So okay, so we’ve got over 400 million in capital, a lot of that goes to building the global platform, which means a lot of people and a lot of places and a lot of stuff to deal with. So eight 900 employees, we’ve got buybacks for stock, we’ve got, you know, money set aside to help diversity and inclusion. So it’s easy for someone listening to be like, Man, 400 million would solve all my problems. One, I’m willing to bet it created some on some level, and then also what it like what problems are left to solve? Yeah, out of business. So first off, did 400. Did the capital create any other issues or stuff to deal with? And then what are the problems left to solve even with that, with that?

Sandy Kemper 42:22

Well, the more coming out in, the more you raise, the more pressure there is to give a multiple against what you raise, right? I mentioned the first money I put into the business, I had founder shares, but I also put some of my cash, and along with some early Angel funders, who came in at 50 cents. Last round pricing was 31 bucks, that’s a nice appreciation. But you know, the money that comes in 31, they’re not looking for a 60x, they’re looking for four or five, maybe 10x. The more your raise, the higher the valuation at which you raise, the more expectation there is for you to work even harder. And that’s a great expectation. But it does create pressure to come back just a second on funding just generally. You’re right, the global platform, lots of offices around the world, lots of people. But the most important thing when you’re raising money is your unit economics, right? You want to raise the money and invest it in something where you’re not selling $1 for 99 cents and calling it good. So our world on the unit economics is what it costs us to acquire. You mentioned onboarding 20,000 businesses in a month, yes, great. Our cost to do that is about 150 bucks per business, which is a ridiculously low acquisition cost is 5000 a day. Well, let’s keep going. Right, but now, you want to be efficient in how you’re acquiring. So we’ll spend 150 bucks to bring in all those businesses onto our platform. Now, only some of them will use us to fund themselves. Some of them use us just to see what their future cash flows going to be from their customer. That’s free, you can do that all day long on our system and use invoice central for that. If you’re going to use us to fund that’s when we get paid. That was where that 20% revenue share was I was talking about. So, of those businesses that we bring on the turn into funded customers. For us, our cost to acquire is about $1,000. Because it’s a smaller percentage of those we bring in our first year gross market revenue is $4,000. So if you can bring something on for x and you can get Forex, of course, you’re going to spend money, raise money to hire more salespeople to do more marketing to do more acquisition to get your name out there so that we’re not dealing with this 40% of the customers saying never heard of you before. So now the corollary to that is you can have great unit economics, but you need also to have decent revenue retention. So you don’t want to have any leaky bucket. You want to make sure that that we’re sure that what you’re bringing on stays on. So we’re very fortunate because I think we’ve built a better mousetrap with our marketplace. Our net revenue retention is 133% per year. So we have good unit economics to go acquire. We’ve got good nobility of cause we’ve got a low cost, convenient capital apparatus. People stick around. So, those people that came in last year now are doing 33% more with us in terms of revenue and cash flow generation for themselves than they were last year. And that that has been that has been our compound annual same-store sales growth rate since we started.

Matt DeCoursey 45:15

You remember before we hit record, and I said last time, I let you pick the topic, and then I gave you a hard time for making me hire an economics tutor. I thought I escaped that. But we’ll have to do a little bit of that afterward. And you know, like, so. So if you’re listening, and you’re wondering, yeah, it’s a lot to take in. But no, this I mean, that’s the whole key. That’s the whole point of raising capital and venture capital. And I talked to a lot of people who are like, I don’t know, if I want the money. I’m like, if you’re gonna get five back for one? Heck, yeah, then how much of it it’s the same thing. It’s my approach to entrepreneurship is really simple. I test test test, I’m not afraid to try 10 things, hoping that one would work. I’m basically looking for a crack. Once I find it, it’s my job to shove an elephant through it. There you go. So you know, and that’s, that’s the key. And you know, you’re looking for these things in traction. And it makes sense. And that’s really the return on it. And now Now another thing is, you say, Well, if you’re making money, why sell equity or whatever?

Sandy Kemper 46:13

Well, I mean, you could do more of it.

Matt DeCoursey 46:15

Yeah, once you know, you’ve got it. I mean, if you’re out there listening, if you knew you were gonna get $5 back for every dollar you had in your hand, like how hard would you go out? Now, let’s talk about that for a second. Because, you know, you’re clearly experienced and versed in raising capital, first off, how what was the soft bank experience like? has there pretty

Sandy Kemper 46:38

There pretty lots of kind of a big deal. Lots of press about soft bank, both good and bad. And that’s the case for anyone who’s going to be highly successful, you’re gonna have some great accolades, you’re gonna have some arrows in your back as well. They, they’ve been great. And one of the things that we like about Softbank and about all of our partners is that they understand where they can add value, and they sort of stay in their swim lane relative to that value. So Softbank, in particular, because they’ve got such a global footprint has been wonderful. And our market expansion in different countries. So soft banks, global, lots of investments all around the world, probably one of the most prolific investors in the world.

Matt DeCoursey 47:14

Well, you mean more like they get you in front of people?

Sandy Kemper 47:17

Exactly. They’re in this house rapid Cisely right to get around that, hey, 40% of the people haven’t heard about you. Well, let me here’s, here’s my big brother Softbank, walk in, walk him in, oh, I’ve heard about SoftBank. Great, having that introduction. So yeah, as you guys are building your business, you’re gonna build our business, if your listeners just like you want to amplify, and you can amplify with press, you can amplify with social media. But you can also amplify with great relationships, advisory boards, board members, and investors, who who can solve a need for you. And in this case, they’ve been great on bringing in large enterprises and making great introductions. Union Square was great at thinking through more platform dynamics. And they’re more of an early-stage investor in Masik, which is a great firm. Investing a lot of money out of Singapore has also been fantastic for us relative to connections and introductions all throughout Asia. So you want to have local know how to go with your national platform. And anyone that can help us with that local know-how, as I said, to Masik, in Asia, soft bank in Asia. Now, third point, one of the largest hedge fund investors and public companies, as part of our ownership group, making introductions to us to those other companies that they own, or maybe that they’ve got great relationships with. That’s, that’s just bread from heaven.

Matt DeCoursey 48:26

Well, speaking of arrows, I’m going to end up with a bunch of them in my back, if I don’t ask you for a couple of tips for raising capital, like just a couple quick do’s and don’ts for those that want to do it or maybe do it better.

Sandy Kemper 48:38

It depends on the stage. Right. So I would, we got very lucky and were able to get Union Square Ventures to be interested in us back in the day, and I think they came in at a $25 million valuation after I did the angel rounds. So they were probably, I don’t know, two bucks or $202.50 or something for their share. So they’ve done well on their, their appreciation. But then I’ve told us many times too many folks that they were not the only offer we had we were lucky to have other offers. They were not the high offer we had either, but they were the best venture capital firm. Yeah. And the fact that we had Union Square coming in meant that our B was already done, not because Union Square was gonna fund it. But because Union Square’s reputation was such as long as we didn’t fall flat on our bottom, that we were going to get a B because people were like, well, if Union Square put money into us a, I’m in for B. And then it becomes kind of cascading because then that B, which is influenced by the A, causes the C to go wait a minute. So, basically, Union Square because we did not take the high offer because we took them best VC, we could find our B and C we’re kind of done already. And that’s what you and I were talking about relative to raising capital. You don’t want to raise everything upfront, because you’re going to dilute the heck out of yourself. So you raise a little bit and then you raise a little bit more and a little bit more each time at higher valuations. So my advice to any entrepreneur in the early stage would be take this sounds bad. Take the lowest valuation you can stomach from the best VC you can find.

Matt DeCoursey 50:09

That’s great advice. Actually, Watson and I were just talking about that and part 50 of 52. We’re talking about negotiating successful exit, which means he has some experience? And you know, he was we’re talking about VinSolutions. And you know, one point they had an offer that at the time was the highest one. And he compared that he didn’t name it, but you compare the buyer to being like the Darth Vader in the industry, which I pointed out, I think Darth Vader’s a little misunderstood on.

Sandy Kemper 50:36

The second time you brought up Star Wars, last time it was Yoda, and you made me do my Yoda impression. I’m not sure I can do the Darth Vader impression. I’m not gonna lie.

Matt DeCoursey 50:49

It’s amazing what I am your father. It’s amazing what you’ll remember three years later, thanks. But yeah, so anyway, I digress from Darth Vader. But you know, he was they didn’t feel comfortable making the sale? Because they were looking out for other people and like, where are you going to get help and whatever. Now, fortunately, for him, someone then came in with a better offer. One thing to remember is, and I think you kind of validated this is you can’t have an auction with one better. So get more people. You know? And then yeah, oh, yeah, creates a little bit of urgency, FOMO, and other stuff. So on the flip side, because we love our do’s and don’ts, like what’s a couple things that you’re going to do as an early stage founder that are going to pretty much guarantee? And so I will, even based on on your own personal experience in a lot of different businesses, what’s something that someone does, and you’re like.

Sandy Kemper 51:40

No, but better to sort of tell stories about how stupid I was in the past. So I went into here’s an interesting perspective. I’ve had told to me by the folks at Union Square and later validated, they won’t do a deal if it’s unanimous. There’s got to be somebody who’s poking at it. And they really don’t like to have single founder businesses, right? So I was lucky enough to have Pete Thomas with me at that time. Pete had been with me to another business before. And he’d been a good adviser and a great friend and a great advisor. And he kept me he, basically, said to me, you’re gonna go in and you’re going to talk about big enterprise stuff you didn’t you just got to care about big enterprise. So they care about networks, they care about the marketplace, they care about the small businesses, you go in there and you start talking enterprise, we’re not going to get funded. So I listened to what Pete had to say. So the thing there I would say is, don’t think you know, at all, make sure that you’ve got a diversity of opinion. And if you could go to that fundraise with people who are sort of yin and yang, and yet very much simpatico and sort of united around the the true north of your company, showing that creative tension between multiple people is going to make that funder go wait a minute, there’s a couple of really great minds thinking about how to get after this problem.

Matt DeCoursey 52:47

Well, and the solo founder thing is, there’s a lot of people that feel that way. And the reason is, as well, there’s the bus rule, that person gets hit by a bus. Yeah, fair point. It’s a problem. And then also, there’s, you know, we talked about passion earlier. And I’ve given a lot of advice to people that are on their way to pitch meeting, and you know, they’re what do I do? Show your passion, show them who you are, you know, really, especially in the earliest stages, they’re investing in you, bet on the jockey, not the horse yet. Now, that can change a little bit later. But I personally believe that without passion, you are probably going to fail as an entrepreneur because that’s what gets you through the days where you want to quit, maybe should quit, or you’re standing there going, alright, I’m gonna flip this coin, heads on quit and tells them out that passion, just you slice through that stuff, maybe not every day, like a hot knife through butter, but sometimes you don’t even notice it.

Sandy Kemper 53:46

You and I talked about this last time, like the five words that I think are most important for entrepreneurship, curiosity, passion, tenacity, intellect. You got to have a little bit of smarts and empathy. And when I started out to your point, you were using passion as the example. I would have said tenacity, right? Because you get knocked down time and time and time again, you got to be tenacious. You got to be able to stand up and go. So back in the early days, it was tenacity, passion, intellect. Empathy was kind of downloaded. My curiosity has always been high for me. Meaning, I think that’s the other advice I would give to an entrepreneur relative to funding, be curious about that firm. What do they want you to do? What do they think? Where are they want other companies are there in their portfolio that might work for you? So curiosity is still my number one. Number two, in the old days, tenacity, passion, intellect, and empathy. Now at 850, or 900, or 1000 people, I find that empathy is gone from download, because I’ve got to care about so many more people than just myself, right? Empathy is super high on my list now. So it’s probably curiosity with a very quick follow of empathy, with tenacity kind of going down a little bit because it’s more about group tenacity. I’ve got a great crew of people around me. All these folks, we’ve gotten a far away we take care of each other. And with that empathy and thinking about the folks you serve, making sure that your crew also is united and caring for themselves, not just caring, meaning caring for each other, not just caring about the profit, not just caring about the revenue, but have true empathy for yourself, for those around you and for your customers, you’ll build a great business, if you’re clearly lacking empathy for your team, they’ll know it. And it’s real.

Matt DeCoursey 55:18

That’s, you know, like it Full Scale our biggest assets are people staying with you, and you know, and, you know, that’s a key ingredient. Now, since the last time I’ve seen you, I’ve actually been very busy studying what makes genius things occur. And, like, some people think it’s a new book coming, or maybe it’s something else, but I’m just really curious, I’ve always been fascinated. You’re gonna love this. So there’s, people often confuse talent and genius. Talent has been able to hit the target everyone can see, genius is hitting the target. No one else was. Right. And that’s a, you know, a very, you know, common thing now, with that there are 24, maybe 25 depending on what words you want to use traits that exist in people that are considered genius. Now, curiosity is is almost the unanimous decision, or the unanimous opinion that you without it done, you’re done when it comes to the genius thing. So, you know, I’ve been literally like, even I mean, I’ve been using some of my connections in music, I’ve talked to rockstars about it, like how do you get up there at 937 on any given Thursday and do genius stuff because a lot of it is preparation,

Sandy Kemper 56:39

but and hard work right? Talent genius, but I mean, percentage,

Matt DeCoursey 56:43

you know, my book balance me the thesis statement is success demands payment in advance and I have not like I have not proven that wrong yet. Because you’re not gonna you’ll talk to these, you know, like people that just do extraordinary things and like, you know, what, a lot of people don’t ever seem to recognize is I’ve done this like 30,000 hours or something. But yeah, so the characteristics that need to exist drive courage, devotion to goals and knowledge, honesty, optimism, ability to judge and regard that they don’t make assumptions. Prior to fact fact-based decision Soozee Azzam willingness to take chances. They’re dynamic, enterprising, persuasive, outgoing, they have the ability to communicate their patient with others, but never with themselves

Sandy Kemper 57:31

that well that’s that’s the key on tenacity, right? There’s no reason there was no reason to be empathetic when you were just a one-man shop because you had to kick your own butt. So you can’t be empathetic to yourself, you got to be tenacious. But as you get other people around you, you’ve got to really build on that empathy, muscle

Matt DeCoursey 57:43

perception, perfectionism, meaning they don’t tolerate mediocrity, particularly on the cells. They have a sense of humor, mainly about joking about themselves, like you just demonstrated that you’re like, I don’t want to tell stories about others, I got plenty of dumb stuff I’ve done. Let’s talk about that. versatility, adaptability, curiosity, individualism, meaning, like they’re not worried about other Well, we talked about that earlier. I’m not driven by the awards. Cool, but I, you know what, so I took the award, I went to the bank, and it didn’t fit in that little tube. And I realized it wasn’t worth anything, man. I was like, I can’t do anything with this, can I get a bigger Tuesday actually come into law, it’s gonna it’s gonna cost you more if you want to put in your safe deposit, wear a mask when I come in. Because I didn’t bring one, I wasn’t planning on this. idealism and imagination. I’d love to see and I will, and the main thing and that and I want everyone that just listened to that to know the one thing that I have have learned that I think is key with this. And I really had put a lot of time into this is the is the idea that geniuses are born and not made, they are made, everything I mentioned, is something you can be aware of, and go through, cultivate work on proliferate and encouraged within your business.

Sandy Kemper 59:03

So in fact, I’ve actually believe it or not, my lowest has always been on that five Word. Word test I was going through my lowest has always been intellect. I see a lot of small, smart people who just do not have drive a lot of smart people who are just a little condescending, and the way they think. And that’s, that’s just disastrous around other people. So it’s actually been studied, right? I think it was, I don’t know whether it was 146 or 126. But it was a certain level of IQ after where you, perishes, after which you become a really, really bad leader.

Matt DeCoursey 59:33

Or, yeah, I’ve actually had that discussion with people like, there is definitely a point at which IQ and you’re like, wow, that’s like, on paper, the smartest person that is not smart enough to do anything with it, apparently, on some level. So it’s, I think, maybe just see things a little different. My IQ is like 67. So I’m 59. Yeah, well, I’m working on it. I’m working on it.

Sandy Kemper 59:57

All hard work. And the harder you work, the more I keep.

Matt DeCoursey 1:00:00

Yeah, so before we get into the founder’s freestyle, which is how I like to end my shows, I say my shows, I’m not the only host of Startup Hustle as you probably know. Make sure you tune in for Matt Watson’s upcoming one-on-one episodes with guests. Those are kicking off in March, and I don’t know what day this is coming out. Maybe you already listened to one. Tune in weekly with Lauren Conaway. I know you’re a Lauren Conaway fan. She’s just got an awesome, she just got her 5000 female member and innovator. That’s cool. Congratulations. You’ve been a supporter of hers. And tune in for Andrew Morgans. So when you can learn how to accelerate your product and eCommerce sales in need C2FO, there you go.

Sandy Kemper 1:00:35

That’s a one-two punch one-hand watch.

Matt DeCoursey 1:00:39

What else? And then make a bunch of money. Come on the show and share your secrets with that. Now you go. You’ve done the founder’s freestyle before?

Sandy Kemper 1:00:47

I don’t know if I called it that. But I don’t think I did. Get a little nervous.

Matt DeCoursey 1:00:50

Don’t, well, I have had people sing rap.

Sandy Kemper 1:00:55

We made me name my favorite songs. Like you gave me some song. And I’m like, yeah. I’m looking at you. And you were like, I don’t know what the song was. But then you said what do you what do you see? When you look at me? I’m like, I just remembering must read love.

Matt DeCoursey 1:01:0

We love that game so much that we bought part of the company. And we build an app for it too. So yeah. Well done. So really, in the end, the founders freestyle is you know, you know, here we are. We went past what the normal length is. It’s hard to keep you under an hour, man. We could go forever. And I know you you need to come back. Don’t wait. 600 up and just invite me.

Sandy Kemper 1:01:27

True. True. Will you be okay?

Matt DeCoursey 1:01:31

I saw any news about you. Sure, what do I do? I never heard of these. And I’m also not in the building next to yours anymore. So I don’t see. Are you probably don’t you don’t see my pickup truck? Yeah, well, and I think it’s upfront. Yes. You know, the founders freestyle really exist. As you know, these episodes go fast. You’re talking about a lot of stuff. And you know, I want to make sure anyone that’s in thank you for coming in. I know you’re busy. And I know you like sharing your message too.

Sandy Kemper 1:02:01

Yes. Thank you. Thank you.

Matt DeCoursey 1:02:02

Is there anything that you left out any key points from today that stick out or just really anything? Your closing remarks?

Sandy Kemper 1:02:10

I think the only thing I would keep focus on as you get such great listenership as you are contemplating being married, or being a dad or being a wife or doing extra doing why for the first time, a lot of folks hesitate on being an entrepreneur. I get there’s risk. And for me, you know, I was lucky to be in a decent job. And what I didn’t want to do, I think that kind of caused me to say I want to, I want to break away, I didn’t want to wake up at age 55. I’m now 56. And wonder what if there’s a lot of there’s a lot of fear. So I use that as a as a sort of a false catalyst to say alright, so you don’t want to wake up and say, what if we better go to your what if now. I think a lot of people are afraid to try. And I’d love people not to be afraid to try because in the end, if it doesn’t work out, you can always go do something else. Don’t wait to try your idea. Don’t wait to become that entrepreneur that you want to be because at some point in time, it will be too late.

Matt DeCoursey 1:03:16

Yeah, I talked about that in my first book and call it the right time myth. Because there’s never a right time. There isn’t and you know, that’s another thing. You know, it never really feels like the right time. Entrepreneurs solve problems, and you don’t always know, you know, you look at Full Scale. That is not the business that Matt Watson and I set up at the start. Yeah, we got a couple of because of this podcast, and people we knew, and everyone’s like, Hey, man, I got the same problem. And you hear the echo. And, you know, it deserves an answer. And then, you know, in our case, there was there, were just a hell of a lot of problems with North American companies needing to build offshore teams and the solutions were shitty, and they needed a fix. And I, we felt that it needed to be built by founders for founders now, you know, as I, my freestyle here is, is really like, well, first off, you always remind me of the importance of the unit dynamics, because this is data, there’s your things, you know, and if you ignore them, you’re accumulate, you’re not depositing profits, you’re depositing opportunity costs. And that’s a key ingredient. And you know, so many of you here too, that people are adverse to wanting to raise capital. And you know, they think VCs are you know, how the, you know, they have an issue with that, and you know, they don’t like these people are investing in your success. They’re not, they’re Darth Vader, they’re not like hahaha, take over your planet highly aligned with you.

Sandy Kemper 1:04:43

And yeah, as you point out, find, find those forums, the vast majority of them are this way who are VCs who are founder friendly. I’ve been generally if you’re not founder friendly, you’re not going to survive as a VC because words gonna get out that you’re not a good person and you don’t care about the founders and are founders going to come to the vast majority of these folks that are out there pretty good. My admonition and yours as well as find the very best one you can don’t be greedy on price be greedy on relationship.

Matt DeCoursey 1:05:11

And now, my final comment isn’t about greed. It’s about asking, as I mentioned earlier, what’s it what’s easier climbing to the top? So I’m asking those up top to pull you up. Now, Sandy, I know that you have always been really accommodating to a lot of people I’ve talked to anytime I’ve brought your name out there. Usually, someone’s like, oh, yeah, he’s given me advice, or helped me out. You’ve done it for me. And with that, you know, I want to encourage the entrepreneurs of the world to find other folks that have done the things that you want to do or might do. You solved my funding problem, you had your funding problem solver.

Sandy Kemper 1:05:45

I just tweaked it.

Matt DeCoursey 1:05:47

Well, no, you? Well, you first you, I hadn’t considered that route, the way that you had phrased it. But that was an obvious answer for you. And honestly, I took 10 minutes of your day.

Sandy Kemper 1:06:01

I mean, I because you told me that it’s been one of my best investments, I keep looking at your checks coming into my checking account, God, I love this guy, just every month, every month, every month, this is a great deal. After you leave, I’m gonna refinance it at a much lower rate on a production of that sort of receivable.

Matt DeCoursey 1:06:10

And that’s the right thing to do. But, but like this is, you know, entrepreneurs are a community of heart, there’s a tribal nature about that. And with that knowledge transfer is inherent, like there are people that did it for you, there’s people that did it for me, I’m doing it for other people. I feel like we do it through the show. And, you know, the thing is, though, as much like you mentioned, if you don’t ask, maybe you don’t receive but what’s the worst thing that’s gonna happen if you ask someone for advice, I email me D, CO. D CEO at FullScale.io. There you go. I met done easy to get a hold of and you know, people do it all the time. I get messages on LinkedIn all over the place. And you know, and I’m always humbled to know that all the work and effort and time that we spend doing the show it makes a difference for sure.

Sandy Kemper 1:07:04

And your cousin, your cousin people to jump into that entrepreneurial boat take the risk of de-risking it by talking about it, you’re giving an educational format rocks, when?

Matt DeCoursey 1:07:11

Absolutely, I’m more concerned about helping you avoid the pitfalls, because you’ll figure it out. But there’s just some stuff you do, because you don’t know any better. So, Sandy, thanks again, man. You know, I guess, do we have to wait till a billion in capital for the next.

Sandy Kemper 1:07:27

No, God? No, please? I hope not.

Matt DeCoursey 1:07:29

Is that is that’s it’s the aging that occurs from the capital.

Sandy Kemper 1:07:34

I’ve been told to do this. I gotta go find a replacement.

Matt DeCoursey 1:07:37

We’re working on an algorithm and how they have dog years, right? Yeah, it’s all seven to one or something like Yeah, I think entrepreneurs are very similar.

Sandy Kemper 1:07:45

Well, that’s it. That’s what they say. You sound like Yoda. Now I’m not gonna do it. You’re in the life of a startup is seven years of normal life. Exactly. Right.

Matt DeCoursey 1:07:53

Right. So Oh, my God, I’m like 125 years old, then.

Sandy Kemper 1:07:58

You’re beautiful. You’re a guy. I’m older by a longshot. It’s now it’s been a while, of course, I’ve done a couple of companies, but this company I’ve been with, since. Boy, I think my 2008 is when we started writing code and you know, drinking beer and thinking about patents. 2010, we incorporated 2000. No, 2010 was our first market transaction. March. St. Patty’s Day. 2010. So that’s 20 267,000.

Matt DeCoursey 1:08:24

And I think he gets axonal. Round. Since we both acknowledge how old we are, it’s almost 5 pm local. It’s time, man.

Sandy Kemper 1:08:40

Time is beer time.

Matt DeCoursey 1:08:43

I’m gonna catch up with you down the road, brother.